A US mediator launched a new truce mission tonight, just as Israeli premier Ariel Sharon ordered his troops to start pulling out of the West Bank town of Ramallah where Yasser Arafat remains trapped.

But there was no let up in the slaughter that has forced President Bush to sends envoy General Anthony Zinni to the region in a bid tom secure a ceasefire.

Eight Palestinians and three Israeli soldiers were killed in new clashes today.

Five armed Palestinians were shot dead by Israeli troops enforcing a curfew in Ramallah, and two militiamen, including a bomb expert were killed in an Israeli missile attack on their West Bank hide-out.

In the Gaza Strip, Palestinian militants detonated a powerful bomb under an Israeli Merkava-3 tank, killing three Israeli soldiers and wounding two.

And in biblical Bethlehem, Palestinian militiamen shot dead two suspected informers, then dragged one of the bodies through the streets on the back of a pick-up truck.

They tried to dangle the body from a building on Manger Square, overlooking the Church of the Nativity, Jesus's traditional birthplace, but were stopped by Palestinian police, who arrived after the men had been killed.

One of the men was sentenced to death early last year, but the other had not been tried.

Both Israeli and Palestinian officials said they were ready to work on a truce with General Zinni who was to have talks with Sharon tonight.

As Zinni landed, Israeli Defence Minister Binyamin Ben-Eliezer ordered a gradual pull-back of troops from Ramallah, the Palestinians' commercial centre which had been occupied by dozens of Israeli tanks since Tuesday.

A senior Palestinian official, Mohammed Dahlan, said a partial withdrawal or a withdrawal followed by a closure would be unacceptable. "They have to pull out immediately and fully," he said.

Palestinian leader Arafat, meanwhile, said he remained "completely committed" to reaching a peace agreement with Israel, but accused Sharon of abandoning previous commitments.

Sharon has lost the support of a hawkish partner over his decision to drop a demand for seven days without violence as a precondition for a ceasefire.

The concession prompted the two Cabinet ministers from the ultranationalist National Union faction to quit the coalition government. The resignations of Tourism Minister Benny Elon and Infrastructure Minister Avigdor Lieberman took effect today. Despite the defections, Sharon's broad-based coalition retains control of 75 seats in the 120 member parliament.

In one Bethlehem gun battle, an Israeli tank shell hit the Holy Family Church, which is part of a compound that also houses a hospital and an orphanage, said Sister Sophie, a nun in charge of the complex. The shell slammed into the church roof and peppered a rooftop statue of the Virgin Mary and sliced off her hands and nose.

The army said it was looking into the incident.

In the Gaza Strip, three Israeli soldiers were killed and two were wounded when Palestinians set off a bomb under their Merkava-3 tank, considered one of the most heavily armoured in the world. One soldier was killed outright and two were burned alive in the tank, Israeli radios said.

Three different Palestinian groups claimed responsibility.

Only a month ago, three soldiers were killed in an identical attack in the same location.